Full-Year 2023 Summary
- Cash from operations of $149 million and capital expenditures
of $70 million resulted in Free Cash Flow* of $79 million and a $47
million year-over-year increase to $259 million cash at year end;
approximately $212 million of additional liquidity is available
under two, undrawn committed financing facilities
- Net loss from continuing operations of $701 million included a
pre-tax, non-cash goodwill impairment charge of $349 million
related to the Engineered Materials reporting unit, $56 million
related to various restructuring initiatives and non-cash,
after-tax charges of approximately $160 million related to
increases in valuation allowances on deferred tax assets in certain
subsidiaries
- Adjusted EBITDA* of $154 million included unfavorable impacts
of $51 million from natural gas hedges, $20 million from net timing
and $13 million from fixed cost under-absorption due to reducing
inventory levels
- Announced asset closures and other restructuring actions during
the year which, when combined with lower natural gas hedge losses,
are expected to contribute sequential profitability improvement of
approximately $100 million in 2024
Fourth Quarter 2023
Summary
- Cash provided by operations of $18 million and capital
expenditures of $21 million resulted in Free Cash Flow* of negative
$3 million including a $99 million decrease in working capital
- Net loss from continuing operations of $265 million included a
pre-tax charge of approximately $38 million related to
restructuring initiatives, principally related to the announced
closure of the Ternuezen, the Netherlands styrene plant, and
non-cash, after-tax charges of approximately $160 million related
to increases in valuation allowances on deferred tax assets in
certain subsidiaries
- Adjusted EBITDA* of $20 million included a $9 million
unfavorable impact from natural gas hedging
Trinseo (NYSE: TSE):
Three Months Ended
Year Ended
December 31,
December 31,
$millions, except per share
data
2023
2022
2023
2022
Net Sales
$
837
$
975
$
3,675
$
4,966
Net Loss from continuing operations
(265)
(364)
(701)
(428)
Diluted EPS from continuing operations
($)
(7.53)
(10.42)
(19.88)
(11.91)
Adjusted Net Loss*
(105)
(60)
(244)
(17)
Adjusted EPS ($)*
(2.99)
(1.72)
(6.92)
(0.48)
EBITDA*
1
(322)
(223)
(120)
Adjusted EBITDA*
20
6
154
312
*For a reconciliation of EBITDA, Adjusted EBITDA, and Adjusted
Net Income (Loss), all of which are non-GAAP measures, to Net
Income (Loss), as well as a reconciliation of Free Cash Flow and
Adjusted EPS, see Notes 2 and 3 to the financial statements
included below.
Trinseo (NYSE: TSE), a specialty material solutions provider,
today reported its full-year and fourth quarter 2023 financial
results. Net sales in the full year decreased 26% versus prior
year. Lower prices from the passthrough of lower input costs
resulted in a 14% decrease and lower sales volumes led to a 13%
decrease. Persistent underlying demand weakness and customer
destocking throughout the year, especially in building &
construction and consumer durable applications, led to lower sales
volumes across all regions and segments.
Full-year net loss from continuing operations of $701 million
was $273 million below prior year. The current year included
approximately $160 million of after-tax charges related to
increases in valuation allowances on deferred tax assets in certain
subsidiaries. This non-cash charge is not expected to affect
near-term or long-term cash flow since most of these tax attributes
do not expire in the foreseeable future. Additionally, there was a
year-over-year $52 million unfavorable impact due to higher
goodwill impairment and restructuring charges. Adjusted EBITDA of
$154 million was $158 million below prior year from lower volume
across all segments, unfavorable variances of $41 million from net
timing and $38 million from natural gas hedges, as well as $40
million lower equity affiliate income from Americas Styrenics.
These impacts were partially offset by pricing actions in Latex
Binders and cost actions including restructuring initiatives
announced in late 2022. Cash from operations of $149 million and
capital expenditures of $70 million led to Free Cash Flow* of $79
million which resulted in year-end cash of $259 million, a $47
million year-over-year increase.
Net sales in the fourth quarter decreased 14% versus prior year.
Lower price from the pass-through of lower raw material costs led
to a 10% decrease. Lower sales volumes in Polystyrene, Latex
Binders and Plastics Solutions, caused by underlying persistent
market demand weakness and more pronounced year-end seasonality,
led to a 7% decrease. These impacts were partially offset by a 3%
increase from currency.
Fourth quarter net loss from continuing operations of $265
million was $99 million above prior year. The current quarter
included approximately $160 million of after-tax changes related to
increases in valuation allowances on deferred tax assets in certain
subsidiaries. The prior year included a $297 million charge related
to goodwill impairment which was partially offset by higher income
taxes of $211 million in the current year. Adjusted EBITDA of $20
million was $14 million above prior year due to a $19 million
unfavorable net timing impact in the prior year in comparison to a
$1 million favorable impact in the current year. Excluding net
timing, lower volume across most segments as well as lower equity
affiliate income from Americas Styrenics was mostly offset by cost
actions including restructuring initiatives announced in late
2022.
Commenting on the Company’s fourth quarter performance, Frank
Bozich, President and Chief Executive Officer of Trinseo, said, “As
expected, we had sequentially lower results in the fourth quarter
as more pronounced seasonality and continued customer inventory
management and destocking led to a challenging end to the year.
Despite this, we generated positive free cash flow during the year
and remain in a solid liquidity position as we enter 2024, and we
are seeing the positive impact of our restructuring initiatives
taking effect. I would like to thank our employees for their
perseverance during what has been one of the most challenging years
our industry has faced in several decades.”
Fourth Quarter Results and Commentary
by Business Segment
- Engineered Materials net sales of $190 million for the
quarter decreased 7% versus prior year including a 16% impact from
lower price due to raw material pass-through, partially offset by a
6% impact from higher sales volume. Adjusted EBITDA of $0 million
was $5 million above prior year including a favorable net timing
variance of $8 million. Excluding the net timing variance, lower
margin was partially offset by higher sales volume and lower fixed
costs.
- Latex Binders net sales of $215 million for the quarter
decreased 16% versus prior year including an 8% impact from lower
price from the pass-through of lower raw material costs and an 11%
impact from lower volumes in Europe and North America and across
all applications. Adjusted EBITDA of $19 million was $1 million
below prior year as lower volume was partially offset by pricing
actions. Volume for higher-margin CASE applications declined by 2%
in the fourth quarter compared to prior year, showing better demand
resilience in comparison to other applications.
- Plastics Solutions net sales of $231 million for the
quarter were 15% below prior year including a 12% impact from lower
price due to the pass-through of lower raw material costs and a 6%
impact from lower sales volume from the closure of one
polycarbonate line in Stade, Germany. Adjusted EBITDA of $16
million was $25 million above prior year primarily from higher
polycarbonate margin including impacts from restructuring actions
in Stade, Germany.
- Polystyrene net sales of $166 million for the quarter
were 23% below prior year. Lower price, primarily from the
pass-through of lower styrene costs, led to a 5% decrease, and
lower volume, from weaker demand in appliance and building &
construction applications, led to a 21% decrease. Adjusted EBITDA
of $2 million was $10 million below prior year from lower volume
and margin due to weaker market conditions and pronounced year-end
seasonality.
- Feedstocks net sales of $35 million for the quarter were
25% above prior year as an 11% negative impact from lower price was
more than offset by a 29% favorable impact from higher volume and
favorable currency. Adjusted EBITDA of negative $4 million was $12
million above prior year from the benefits of the closures of the
Boehlen, Germany styrene plant in December 2022 and Terneuzen, the
Netherlands styrene plant in November 2023. Due to these closures,
starting in the first quarter of 2024, the Company will no longer
have a Feedstocks reporting segment.
- Americas Styrenics Adjusted EBITDA of $13 million for
the quarter was $5 million below prior year as lower margin was
partially offset by higher polystyrene volume.
2024 Outlook
- First quarter 2024 net loss from continuing operations of $77
million to $67 million
- First quarter 2024 Adjusted EBITDA of $40 million to $50
million
Commenting on the outlook for 2024, Bozich said, “We are seeing
stronger order loads to begin the year following the challenges we
faced in the fourth quarter, and therefore, we expect significantly
higher sequential profitability in the first quarter of 2024.
However, we view first quarter profitability as the low point of
the year due to seasonally lower volumes and turnaround activity in
the first quarter, as well as the timing of newly awarded
business.”
Bozich continued, “The unprecedented drop in demand we saw
starting in the third quarter of 2022 has persisted, and a great
deal of macroeconomic uncertainty remains. Amid this environment we
have executed numerous manufacturing footprint and other cost
reduction initiatives while extending the majority of our debt
maturities out to 2028. While we are already seeing the benefits of
these initiatives, we will continue to assess additional actions in
2024 to increase our manufacturing network flexibility, which will
enable us to take advantage of regional cost differentials while
also improving profitability, reducing capital expenditures and
optimizing working capital. This will also allow us to continue
investing in higher-value product offerings and sustainable
solutions, and will have us well-positioned for when market demand
improves.”
Conference Call and Webcast
Information
Trinseo will host a conference call to discuss its fourth
quarter and full-year 2023 financial results on Tuesday, February
13, 2024 at 10 a.m. Eastern Time.
Commenting on results will be Frank Bozich, President and Chief
Executive Officer, David Stasse, Executive Vice President and Chief
Financial Officer, and Andy Myers, Director of Investor
Relations.
For those interested in asking questions during the Q&A
session, please register using the following link:
- Conference Call Registration
For those interested in listening only, please register for the
webcast using the following link:
After registering for the conference call, you will receive a
confirmation email with a meeting invitation and information for
entry. Registration is open through the live call, but it is
advised that you register in advance to ensure you are connected
for the full call.
Trinseo has posted its fourth quarter and full-year 2023
financial results on the Company’s Investor Relations website. The
presentation slides will also be made available in the webcast
player prior to the conference call. The Company will also furnish
copies of the financial results press release and presentation
slides to investors by means of a Form 8-K filing with the U.S.
Securities and Exchange Commission.
A replay of the conference call and transcript will be archived
on the Company’s Investor Relations website shortly following the
conference call. The replay will be available until February 13,
2025.
About Trinseo
Trinseo (NYSE: TSE), a specialty material solutions provider,
partners with companies to bring ideas to life in an imaginative,
smart and sustainably focused manner by combining its premier
expertise, forward-looking innovations and best-in-class materials
to unlock value for companies and consumers.
From design to manufacturing, Trinseo taps into decades of
experience in diverse material solutions to address customers’
unique challenges in a wide range of industries, including building
and construction, consumer goods, medical and mobility.
Trinseo’s approximately 3,100 employees bring endless creativity
to reimagining the possibilities with clients all over the world
from the company’s locations in North America, Europe and Asia
Pacific. Trinseo reported net sales of approximately $3.7 billion
in 2023. Discover more by visiting www.trinseo.com and connecting
with Trinseo on LinkedIn, Twitter, Facebook and WeChat.
Use of non-GAAP measures
In addition to using standard measures of performance and
liquidity that are recognized in accordance with accounting
principles generally accepted in the United States of America
(“GAAP”), we use additional measures of income excluding certain
GAAP items (“non-GAAP measures”), such as Adjusted Net Income,
EBITDA, Adjusted EBITDA and Adjusted EPS and measures of liquidity
excluding certain GAAP items, such as Free Cash Flow. We believe
these measures are useful for investors and management in
evaluating business trends and performance each period. These
measures are also used to manage our business and assess current
period profitability, as well as to provide an appropriate basis to
evaluate the effectiveness of our pricing strategies. Such measures
are not recognized in accordance with GAAP and should not be viewed
as an alternative to GAAP measures of performance or liquidity, as
applicable. The definitions of each of these measures, further
discussion of usefulness, and reconciliations of non-GAAP measures
to GAAP measures are provided in the Notes to Condensed
Consolidated Financial Information presented herein.
Cautionary Note on Forward-Looking
Statements
This press release may contain forward-looking statements
including, without limitation, statements concerning plans,
objectives, goals, projections, forecasts, strategies, future
events or performance, and underlying assumptions and other
statements, which are not statements of historical facts or
guarantees or assurances of future performance. Forward-looking
statements may be identified by the use of words like “expect,”
“anticipate,” “believe,” “intend,” “forecast,” “outlook,” “will,”
“may,” “might,” “see,” “tend,” “assume,” “potential,” “likely,”
“target,” “plan,” “contemplate,” “seek,” “attempt,” “should,”
“could,” “would” or expressions of similar meaning. Forward-looking
statements reflect management’s evaluation of information currently
available and are based on our current expectations and assumptions
regarding our business, the economy, our current indebtedness, and
other future conditions. Because forward-looking statements relate
to the future, they are subject to inherent uncertainties, risks
and changes in circumstances that are difficult to predict. Factors
that might cause future results to differ from those expressed by
the forward-looking statements include, but are not limited to, our
ability to successfully implement proposed restructuring
initiatives and to successfully generate cost savings through
restructuring and cost reduction initiatives; our ability to
successfully execute our business and transformation strategy;
increased costs or disruption in the supply of raw materials;
deterioration of our credit profile limiting our access to
commercial credit;increased energy costs; compliance with laws and
regulations impacting our business; any disruptions in production
at our chemical manufacturing facilities, including those resulting
from accidental spills or discharges; conditions in the global
economy and capital markets; our current and future levels of
indebtedness and ability to service our debt; our ability to meet
the covenants under our existing indebtedness; our ability to
generate cash flows from operations; and those discussed in our
Annual Report on Form 10-K, under Part I, Item 1A —"Risk Factors"
and elsewhere in our other reports, filings and furnishings made
with the U.S. Securities and Exchange Commission from time to time.
As a result of these or other factors, our actual results,
performance or achievements may differ materially from those
contemplated by the forward-looking statements. Therefore, we
caution you against relying on any of these forward-looking
statements. The forward-looking statements included in this press
release are made only as of the date hereof. We undertake no
obligation to publicly update or revise any forward-looking
statement as a result of new information, future events or
otherwise, except as otherwise required by law.
TRINSEO PLC Condensed
Consolidated Statements of Operations (In millions, except
per share data) (Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Net sales
$
837.5
$
975.2
$
3,675.4
$
4,965.5
Cost of sales
817.2
978.4
3,533.1
4,693.2
Gross profit (loss)
20.3
(3.2)
142.3
272.3
Selling, general and administrative
expenses
105.3
136.1
310.3
398.8
Equity in earnings of unconsolidated
affiliate
13.0
18.4
62.1
102.2
Impairment and other charges
—
300.1
349.5
339.6
Operating loss
(72.0)
(421.0)
(455.4)
(363.9)
Interest expense, net
63.3
35.3
188.4
112.9
(Gain) loss on extinguishment of long-term
debt
—
—
6.3
(0.8)
Other expense (income), net
1.8
(9.0)
(17.2)
(6.4)
Loss from continuing operations before
income taxes
(137.1)
(447.3)
(632.9)
(469.6)
Provision for (benefit from) income
taxes
127.9
(83.0)
68.4
(41.6)
Net loss from continuing operations
(265.0)
(364.3)
(701.3)
(428.0)
Net loss from discontinued operations, net
of income taxes
—
(1.0)
—
(2.9)
Net loss
$
(265.0)
$
(365.3)
$
(701.3)
$
(430.9)
Weighted average shares- basic
35.2
35.0
35.3
35.9
Net loss per share- basic:
Continuing operations
$
(7.53)
$
(10.42)
$
(19.88)
$
(11.91)
Discontinued operations
—
(0.02)
—
(0.08)
Net loss per share- basic
$
(7.53)
$
(10.44)
$
(19.88)
$
(11.99)
Weighted average shares- diluted
35.2
35.0
35.3
35.9
Net loss per share- diluted:
Continuing operations
$
(7.53)
$
(10.42)
$
(19.88)
$
(11.91)
Discontinued operations
—
(0.02)
—
(0.08)
Net loss per share- diluted
$
(7.53)
$
(10.44)
$
(19.88)
$
(11.99)
TRINSEO PLC Condensed
Consolidated Balance Sheets (In millions)
(Unaudited)
December 31,
December 31,
2023
2022
Assets
Cash and cash equivalents
$
259.1
$
211.7
Accounts receivable, net of allowance
490.8
586.0
Inventories
404.7
553.6
Other current assets
39.5
39.4
Investments in unconsolidated
affiliate
252.2
255.1
Property, plant, equipment, goodwill, and
other intangible assets, net
1,401.4
1,873.5
Right-of-use assets - operating, net
65.3
76.1
Other long-term assets
116.2
164.8
Total assets
$
3,029.2
$
3,760.2
Liabilities and shareholders’
equity
Current liabilities
672.6
689.4
Long-term debt, net of unamortized
deferred financing fees
2,277.6
2,301.6
Noncurrent lease liabilities -
operating
51.7
60.2
Other noncurrent obligations
295.3
288.7
Shareholders’ equity
(268.0)
420.3
Total liabilities and shareholders’
equity
$
3,029.2
$
3,760.2
TRINSEO PLC Condensed
Consolidated Statements of Cash Flows (In millions)
(Unaudited)
Year Ended
December 31,
2023
2022
Cash flows from operating
activities
Cash provided by operating activities -
continuing operations
$
148.7
$
46.4
Cash used in operating activities -
discontinued operations
—
(2.9)
Cash provided by operating activities
148.7
43.5
Cash flows from investing
activities
Capital expenditures
(69.7)
(148.2)
Cash paid for asset or business
acquisitions, net of cash acquired ($0.0 and $1.0)
—
(22.2)
Proceeds from the sale of businesses and
other assets
38.0
5.3
Proceeds from the settlement of hedging
instruments
—
1.9
Cash used in investing activities -
continuing operations
(31.7)
(163.2)
Cash used in investing activities -
discontinued operations
—
(0.8)
Cash used in investing activities
(31.7)
(164.0)
Cash flows from financing
activities
Deferred financing fees
(23.4)
—
Short-term borrowings, net
(10.5)
(17.5)
Purchase of treasury shares
—
(151.9)
Dividends paid
(17.9)
(47.5)
Proceeds from exercise of option
awards
0.1
3.0
Withholding taxes paid on restricted share
units
(2.1)
(3.2)
Acquisition-related contingent
consideration payment
(1.2)
—
Net proceeds from issuance of 2028
Refinance Term Loans
1,044.9
—
Repurchases and repayments of long-term
debt
(1,055.9)
(16.6)
Cash used in by financing activities
(66.0)
(233.7)
Effect of exchange rates on cash
(1.6)
(7.1)
Net change in cash, cash equivalents, and
restricted cash
49.4
(361.3)
Cash, cash equivalents, and restricted
cash—beginning of period
211.7
573.0
Cash, cash equivalents, and restricted
cash—end of period
$
261.1
$
211.7
Less: Restricted cash
(2.0)
—
Cash and cash equivalents—end of
period
$
259.1
$
211.7
TRINSEO PLC Notes to
Condensed Consolidated Financial Information
(Unaudited)
Note 1: Net Sales
by Segment
Three Months Ended
Year Ended
December 31,
December 31,
(In millions)
2023
2022
2023
2022
Engineered Materials
$
190.2
$
205.1
$
788.6
$
1,044.4
Latex Binders
215.0
255.2
939.1
1,256.5
Plastics Solutions
230.7
271.2
1,038.5
1,323.0
Polystyrene
166.2
215.5
743.2
1,093.1
Feedstocks
35.4
28.2
166.0
248.5
Americas Styrenics*
—
—
—
—
Total Net Sales
$
837.5
$
975.2
$
3,675.4
$
4,965.5
* The results of this segment are comprised entirely of earnings
from Americas Styrenics, our 50%-owned equity method investment. As
such, we do not separately report net sales of Americas Styrenics
within our condensed consolidated statements of operations.
Note 2: Reconciliation of Non-GAAP
Performance Measures to Net Income
EBITDA is a non-GAAP financial performance measure, which is
defined as income from continuing operations before interest
expense, net; income tax provision; depreciation and amortization
expense. We refer to EBITDA in making operating decisions because
we believe it provides our management as well as our investors with
meaningful information regarding the Company’s operational
performance. We believe the use of EBITDA as a metric assists our
board of directors, management and investors in comparing our
operating performance on a consistent basis.
We also present Adjusted EBITDA as a non-GAAP financial
performance measure, which we define as income from continuing
operations before interest expense, net; income tax provision;
depreciation and amortization expense; loss on extinguishment of
long-term debt; asset impairment charges; gains or losses on the
dispositions of businesses and assets; restructuring charges;
acquisition related costs and benefits, and other items. In doing
so, we are providing management, investors, and credit rating
agencies with an indicator of our ongoing performance and business
trends, removing the impact of transactions and events that we
would not consider a part of our core operations.
Lastly, we present Adjusted Net Income (Loss) and Adjusted EPS
as additional performance measures. Adjusted Net Income (Loss) is
calculated as Adjusted EBITDA (defined beginning with net income
from continuing operations, above), less interest expense, less the
provision for income taxes and depreciation and amortization, tax
affected for various discrete items, as appropriate. Adjusted EPS
is calculated as Adjusted Net Income (Loss) per weighted average
diluted shares outstanding for a given period. We believe that
Adjusted Net Income (Loss) and Adjusted EPS provide transparent and
useful information to management, investors, analysts and other
stakeholders in evaluating and assessing our operating results from
period-to-period after removing the impact of certain transactions
and activities that affect comparability and that are not
considered part of our core operations.
There are limitations to using the financial performance
measures noted above. These performance measures are not intended
to represent net income or other measures of financial performance.
As such, they should not be used as alternatives to net income as
indicators of operating performance. Other companies in our
industry may define these performance measures differently than we
do. As a result, it may be difficult to use these or
similarly-named financial measures that other companies may use, to
compare the performance of those companies to our performance. We
compensate for these limitations by providing reconciliations of
these performance measures to our net income, which is determined
in accordance with GAAP.
Three Months Ended
Year Ended
December 31,
December 31,
(In millions, except per share
data)
2023
2022
2023
2022
Net loss
$
(265.0)
$
(365.3)
$
(701.3)
$
(430.9)
Net loss from discontinued operations
—
(1.0)
—
(2.9)
Net loss from continuing operations
$
(265.0)
$
(364.3)
$
(701.3)
$
(428.0)
Interest expense, net
63.3
35.3
188.4
112.9
Provision for (benefit from) income
taxes
127.9
(83.0)
68.4
(41.6)
Depreciation and amortization
74.4
89.8
221.2
236.9
EBITDA
$
0.6
$
(322.2)
$
(223.3)
$
(119.8)
Net gain on disposition of businesses and
assets
—
—
(25.6)
(1.8)
Selling, general, and administrative
expenses; Other expense (income), net
Restructuring and other charges (a)
12.5
17.0
31.4
15.9
Selling, general, and administrative
expenses
Acquisition transaction and integration
net costs (b)
(1.5)
0.4
(1.4)
6.6
Cost of goods sold; Selling, general, and
administrative expenses
Asset impairment charges or write-offs
0.6
2.4
2.7
6.3
Cost of goods sold; Impairment and other
charges
European Commission request for
information (c)
—
0.6
—
36.2
Impairment and other charges
Goodwill impairment charge (c)
—
297.1
349.0
297.1
Impairment and other charges
Other items (c)
8.0
11.0
21.5
71.2
Selling, general, and administrative
expenses; (Gain) loss on extinguishment of long-term debt; Other
expense (income), net
Adjusted EBITDA
$
20.2
$
6.3
$
154.3
$
311.7
Adjusted EBITDA to
Adjusted Net Loss:
Adjusted EBITDA
20.2
6.3
154.3
311.7
Interest expense, net
63.3
35.3
188.4
112.9
Provision for (benefit from) income taxes
- Adjusted (d)
12.1
(18.8)
8.2
22.8
Depreciation and amortization - Adjusted
(e)
50.0
49.9
202.0
193.1
Adjusted Net Loss
$
(105.2)
$
(60.1)
$
(244.3)
$
(17.1)
Weighted average shares- diluted
35.2
35.0
35.3
35.9
Adjusted EPS
$
(2.99)
$
(1.72)
$
(6.92)
$
(0.48)
Adjusted EBITDA by
Segment:
Engineered Materials
$
—
$
(4.6)
$
4.9
$
71.6
Latex Binders
19.1
20.2
93.3
110.8
Plastics Solutions
16.5
(8.8)
89.4
91.0
Polystyrene
2.2
12.4
33.3
99.3
Feedstocks
(3.8)
(15.5)
(40.9)
(75.2)
Americas Styrenics
13.0
18.4
62.1
102.2
Corporate Unallocated
(26.8)
(15.8)
(87.8)
(88.0)
Adjusted EBITDA
$
20.2
$
6.3
$
154.3
$
311.7
(a)
Restructuring and other charges for the
2023 period primarily relates to contract termination costs as well
as decommissioning and other charges incurred in connection with
the Company’s asset restructuring plan. Restructuring and other
charges for the 2022 period primarily relates to employee
termination benefit charges incurred in connection with the
Company’s transformational restructuring program.
(b)
Acquisition transaction and integration
net costs for the 2022 period primarily relates to expenses
incurred for the Company’s acquisition and integration of the PMMA
business and Aristech Surfaces Acquisitions.
(c)
Other items for the 2023 and 2022 periods
primarily relate to loss on extinguishment of debt and fees
incurred in conjunction with certain of the Company’s strategic
initiatives, as well as costs related to our transition to a new
enterprise resource planning system.
(d)
Adjusted to remove the tax impact of the
items noted within the table above. For the three months and full
year periods, the income tax expense (benefit) related to these
items was determined utilizing the applicable rates in the taxing
jurisdictions in which these adjustments occurred.
The three months and year ended December
31, 2023 excludes $60.9 million and $65.1 million of tax expense,
respectively, primarily related to the recording of valuation
allowances in the Company’s subsidiaries in the United States and
Switzerland, and adjustments in accruals related to outstanding tax
audits. The year ended December 31, 2022 excludes $4.3 million of
tax expense, primarily related to the revaluation of the Company’s
net deferred tax assets in Switzerland, partially offset by a
benefit from the release of a valuation allowance in one of the
Company’s subsidiaries in Luxembourg.
(e)
Amounts for the three months and year
ended December 31, 2023 excludes accelerated depreciation of $24.4
million and $19.1 million, respectively, and the amounts for the
three months and year ended December 31, 2022 exclude accelerated
depreciation of $39.9 million and $43.8 million, respectively. The
2023 period charges are primarily related to the shortening of the
useful life of certain assets related to the asset restructuring
plan. The 2023 and 2022 periods also include charges related to the
shortening of the useful life of certain IT assets related to the
Company’s transition to a new enterprise resource planning
system.
For the same reasons discussed above, we are providing the
following reconciliation of forecasted net loss to forecasted
Adjusted EBITDA, Adjusted Net Loss and Adjusted EPS for the first
quarter ended March 31, 2024. See “Note on Forward-Looking
Statements” above for a discussion of the limitations of these
forecasts. Totals may not sum due to rounding.
First Quarter Ended
March 31,
(In millions, except per share
data)
2024
Adjusted EBITDA
$
40 – 50
Interest expense, net
63
Provision for income taxes
4
Depreciation and amortization
50
Reconciling items to Adjusted EBITDA
(f)
-
Net Loss from continuing
operations
(77) – (67)
Reconciling items to Adjusted Net Loss
(f)
-
Adjusted Net Loss
$
(77) – (67)
Weighted average shares - diluted (g)
35.2
EPS from continuing operations - diluted
($)
$
(2.19) – (1.90)
Adjusted EPS ($)
$
(2.19) – (1.90)
(f)
Reconciling items to Adjusted EBITDA and
Adjusted Net Income (Loss) are not typically forecasted by the
Company based on their nature as being primarily driven by
transactions that are not part of the core operations of the
business and, as a result, cannot be estimated without unreasonable
cost or uncertainty. As such, for the forecasted first quarter
ended March 31, 2024, we have not included estimates for these
items.
(g)
Weighted average shares presented for the
purpose of forecasting EPS and Adjusted EPS assume that the Company
will be in a net loss position for first quarter 2024, and
therefore excludes the impact of potentially dilutive shares, as
the inclusion of said shares would have an anti-dilutive effect.
Further, the weighted average shares presented do not forecast
significant future share transactions or events, such as
repurchases, significant share-based compensation award grants, and
changes in the Company’s share price. These are all factors which
could have a significant impact on the calculation of EPS and
Adjusted EPS during actual future periods.
Note 3: Reconciliation of Non-GAAP
Liquidity Measures to Cash from Operations
The Company uses certain measures, such as Free Cash Flow as
non-GAAP measures, to evaluate and discuss its liquidity position
and results. Free Cash Flow is defined as cash from operating
activities, less capital expenditures. We believe that Free Cash
Flow provides an indicator of the Company’s ongoing ability to
generate cash through core operations, as it excludes the cash
impacts of various financing transactions as well as cash flows
from business combinations that are not considered organic in
nature. We also believe that Free Cash Flow provides management and
investors with useful analytical indicators of our ability to
service our indebtedness, pay dividends (when declared), and meet
our ongoing cash obligations.
Free Cash Flow is not intended to represent cash flows from
operations as defined by GAAP, and therefore, should not be used as
alternatives for that measure. Other companies in our industry may
define Free Cash Flow differently than we do. As a result, it may
be difficult to use this or similarly-named financial measures that
other companies may use, to compare the liquidity and cash
generation of those companies to our own. The Company compensates
for these limitations by providing the following detail, which is
determined in accordance with GAAP.
Free Cash Flow
Three Months Ended
Year Ended
December 31,
December 31,
(In millions)
2023
2022
2023
2022
Cash provided by operating activities
$
17.5
$
34.0
$
148.7
$
43.5
Capital expenditures
(20.6)
(54.2)
(69.7)
(149.0)
Free Cash Flow
$
(3.1)
$
(20.2)
$
79.0
$
(105.5)
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version on businesswire.com: https://www.businesswire.com/news/home/20240212063022/en/
Andy Myers Tel : +1 610-240-3221 Email: aemyers@trinseo.com
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